Austerity

Austerity is a set of government policies intended to reduce budget deficits, usually through spending cuts, tax increases, or both. Its effects depend on economic conditions, policy design, and who bears the costs.

Fiscal policy: Government decisions about taxation and spending that influence the economy. Austerity is a contractionary use of fiscal policy to reduce deficits.
Recession: A significant decline in economic activity lasting across an economy. Tightening during a downturn can deepen falling output and employment.
Greek government-debt crisis: A sovereign debt and economic crisis in Greece that intensified from 2009. International lending programs tied assistance to extensive fiscal adjustment.
Keynesian economics: An economic tradition emphasizing aggregate demand and the role of stabilization policy. It supports deficit-financed stimulus when private demand is weak.
Expansionary austerity: The hypothesis that fiscal consolidation can raise output under certain economic conditions. Its disputed predictions concern whether confidence and competitiveness can offset reduced demand.
Government budget balance: The difference between a government's revenues and expenditures over a period. Reducing a deficit is austerity's stated fiscal objective.
Unemployment: The condition of people without work who are available for and seeking employment. Reduced public demand and services can contribute to job losses.
European sovereign-debt crisis: A period of financial turmoil involving government debt in several European countries, especially from 2009 to 2012. Austerity became a central response and a major source of political dispute.
Expansionary fiscal policy: Government spending increases or tax reductions intended to raise demand and output. It reverses austerity's contractionary direction, often to support recovery.
Austerity fatigue: Public exhaustion and opposition arising from prolonged policies of fiscal restraint. It highlights the political limits of sustained cuts and tax increases.

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